Fed Chairman Ben Bernanke on a TV screen at the New York Stock exchange in June. / Richard Drew, AP

by Mike Snider, USA TODAY

by Mike Snider, USA TODAY

Boosting optimism for the new year ahead, the government announced Friday that the economy in the third quarter grew at its fastest rate in nearly two years and much better than previously estimated.

Higher consumer spending was largely responsible for the economy's annual growth rate of 4.1% from July through September, the Commerce Department said. Last month, it estimated a 3.6% rate. In the second quarter the economy grew at a 2.5% annual pace.

The latest estimate of last quarter's gross domestic product - that's the value of all goods and services produced in the U.S. -- marked the first time since late 2011 that quarterly GDP growth exceeded 4%.

Last quarter's better-than-expected performance was spurred by consumers spending more over the summer on health care, recreation and other services.

The government says consumer spending grew at an annual rate of 2.0%, up from 1.6% in its previous estimate last month.

"The consumer is back in the game," exulted Chris Rupkey, chief financial economist of Bank of Tokyo-Mitsubishi UFJ, in a client note Friday. "Is this economic growth fast enough to put America back to work? The answer is, yes. The wheels of the economy are turning fast enough to bring down the unemployment rate further. "

Business investment also increased, growing at a 4.8% annual rate, 1.3 percentage points better than the government's earlier estimate.

The report sparked a rally on Wall Street, driving the Dow Jones industrial average up 0.3% and the Standard & Poor's 500 index 0.5% to new records.

Many economists predict fourth-quarter growth will not match last quarter's because the third quarter's large increase in business stockpiles won't be repeated in this period. But they're also optimistic about next year.

Friday's GDP report suggests that the U.S. economy entered the fourth quarter "with more momentum than had previously been thought to be the case," said Richard Moody, chief economist of Regions Financial Corp. "And we expect that momentum to build further in 2014."